The Power of Information.

• Author: Lang, Loren

Today's competitive automotive manufacturing market offers little or no price leverage, making cost reduction an instrumental profit-improvement lever. Employing the lever so it improves effectiveness and efficiency, however, demands that companies do things faster and with fewer resources. To improve task cycle time, managers need timely and reliable information to respond confidently to cost-cutting efforts. Management's collective success hinges, therefore, on better decision support, a product of rethinking and re-engineering processes that direct managers on how to best cut costs. General Motors recently focused re-engineering efforts on its business planning process, so the company could improve profitability corporatewide.

In 1998, a GM executive team adopted a strategy of integrated business planning (IBP). The strategy is a common, global process that integrates best practices to produce a more effective and efficient business planning approach corporatewide. To capitalize on the strategy, IBP vision requires: firm targets or commitments; a planning process that is directly linked to business goals and strategies; and a compressed cycle time of only 90 days, from target setting through plan approval.

The GM executive team identified that timely, accurate and focused information was critical to the success of its managers, the implementers of the IBP strategy. The team also recognized that there was no magic bullet for placing critical data in the minds of managers, requiring that they re-engineer how improved decision support communicates the company's strategic vision.

The budget is a manager's best tool. When tailored and focused, it offers managers the direction they need to make the best decisions affecting their area of responsibility. The GM executive team recognized this, too. The team understood change wasn't easy and the wrong change to forecasting and budgeting could be costly. Wisely, its members decided to implement a pilot forecasting and budgeting program in one of the company's manufacturing divisions. Its pragmatism will permit team members to study the effects of change, so...